Sembcorp Marine books jack-up, drillship orders

FEBRUARY 27, 2014 — Singapore's Sembcorp Marine is starting the year with significant orders. Yesterday it announced that its PPL Shipyard had signed a turnkey jack-up rig contract worth US$214.3 million with Marco Polo Drilling (I) Pte. Ltd., an indirect wholly-owned subsidiary of Marco Polo Marine Ltd. Today, it reported that Singapore, February 27, 2014 : Sembcorp Marine's subsidiary Jurong Shipyard has signed two contracts for US$540 million each to build two drillships with options for three additional units from a subsidiary of Transocean Ltd (Transocean).

The jack-up order takes Singapore-listed Marco Polo into a new line of business. Currently, itd ship chartering business provides tugs and barges to customers in several industries. It also provides transshipment services transporting coal from the mines in Indonesia to customers' bulkers that take it to electric power plants throughout Asia. Its ship chartering business also provides offshore services in Australian waters, the Gulf of Thailand and Indonesia.

Marco Polo marine also has its own sizeable shipyard in Batam. Clearly, though, while its ambitions now extend to owning jack-ups, they do not yet include building them.

The order it has placed with PPL Shipyard covers the construction of one PPL Pacific Class design jack-up for fourth quarter 2015 delivery with options for two follow-on units.

The new rig will be capable of operating in deeper waters of 400 feet and drilling high pressure and high temperature wells to depths of 30,000 feet.

Mr. Sean Lee Yun Feng, Group CEO of Marco Polo Marine said "The signing of the agreement with PPL Shipyard is an epochal moment as it marks the start of a significant leap forward in terms of our operations and service offerings. Together with the grant of the two option units, we are delighted to work together with PPL Shipyard as it is one of the most highly regarded shipyards globally. We are confident of the on-time and quality delivery of high specification rigs from PPL Shipyard backed by its strong track record.

TRANSOCEAN DRILLSHIPS

The order from Transocean is a significant competitive win for Sembcorp Marine. Although Transocean already has seven deepwater drillships on order, they are being built by Daewoo Shipbuilding and Marine Engineering in Korea.

The two being built at Jurong will be built to its proprietary Jurong Espadon III design for deliveries in the second quarter of 2017 and the first quarter of 2018, respectively. Transocean puts the combined capital cost for the pair at $1.24 billion including the shipyard contracts; project management; owner-furnished equipment; inventory and capital spares; but excluding capitalized interest. It says that "the payment terms for both rigs are very favorable to Transocean."

The option agreement covers up to three additional drillships of the same design and specifications on similar terms. The first option must be exercised within one year, the second within 18 months, and the final within 24 months.

"These newbuild drillship orders highlight continued execution of our long-term asset strategy," said Steven L. Newman, President and Chief Executive Officer of Transocean Ltd. "We are committed to reinvesting in our fleet through the addition of differentiated, high-specification and high-return assets that will appeal to a wide spectrum of our customers. We are very pleased to partner with Sembcorp Marine's Jurong Shipyard in this effort."

The drillships will have advanced capabilities for highly efficient ultra-deepwater development drilling operations worldwide. Specially designed for enhanced drilling operations with state-of-the-art drilling facilities, a large moon pool to accommodate a larger riser angle, and a hull designed for superior motion characteristics, the drillships will also feature a large deck space with an enclosed riser bay, a flexible mud system for completion operations, and Transocean's patented hybrid power system for lower emissions and improved fuel economy.

The dual-activity rigs are equipped with Dynamic Positioning Class 3 (DP-3) capabilities, and the drillships' 1,250-ton load path will enable operations in up to 12,000-foot water depths and drilling depths of up to 40,000 feet. The drillships will have accommodations for a crew of 220 personnel and will be initially outfitted with one 15,000 psi blowout preventer (BOP) with the ability to add a second BOP.

Transocean currently owns and operates six drilling rigs built by Sembcorp Marine's yards, including three jack-ups and one semi-submersible delivered by PPL Shipyard and two semi-submersibles built by Jurong Shipyard.